The establishment of a nontraditional credit history is not acceptable for the following scenarios:
- The lender is able to obtain a credit score for the borrower despite the borrower’s limited use of credit.
- The borrower has a sufficient amount of credit to obtain a credit score and the representative credit score is less than the minimum required.
- The borrower’s traditional credit history indicates significant derogatory references, such as a prior bankruptcy or foreclosure. In these cases, the borrower must have re-established credit in accordance with B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit, including the establishment of traditional credit and a credit score.
For additional information, see B3-5.4-01, Eligibility Requirements for Loans with Nontraditional Credit.